Section 11A – Step back. Is it a Carrot or a Stick? Understanding the Meaning of ‘Discipline’ and ‘Employee Benefits’

Psychological injury claims have risen rapidly, with a 30% increase between 2018-2019 and 2022-2023, in comparison to an 11% increase in physical injury claims for the same period.[1]

Section 11A(1) of the Workers Compensation Act 1987 (the 1987 Act) is a common defence and requires an employer to prove (on the balance of probabilities) that:

• They took, or proposed to take, action falling into one or more of the following categories: transfer, demotion, promotion, performance appraisal, discipline, retrenchment or dismissal, or the provision of employment benefits.
• The action ‘wholly or predominately’ caused the psychological injury.
• The action was reasonable.

On 29 June 2024, Deputy President Wood handed down her decision in Rock Logistics Pty Ltd v Chelin[2], which involved a section 11A(1) defence for a psychological injury in the context of Covid-19/vaccinations.

Background

• The worker was as a “shunt driver”. His work involved moving trucks and trailers to and from sheds and loading bays in preparation for the delivery of goods on a site that was operated by another organisation.
• The worker alleged that on 27 and 28 August 2021, he had conversations with his direct manager and a business manager about whether he intends to have a Covid-19 vaccination. The worker alleged that this conversation made him feel that his job was on the line, causing psychological injury.
• The worker made a claim for weekly payments of compensation and medical/treatment expenses.
• Liability was denied, including under section 11A(1) of the 1987 Act, categories of “discipline” and “provision of employment benefits.”
• The worker commenced proceedings in the Personal Injury Commission and the dispute proceeded to an Arbitration hearing before Member Garner, who found in the worker’s favour.
• The employer sought to have the Member’s decision revoked, and for the matter to be remitted to a different Member for re-determination.

Outcome

Deputy President Elizabeth Wood confirmed Member Garner’s decision. The below discussion focusses on the decision concerning section 11A(1).

Limb 1 –category discipline

The employer argued the Member “misunderstood” the “broad scope that should be applied to the concept of discipline” and that its approach to the worker in relation to his vaccination status was a preliminary action taken for safety in the workforce, and as per the directions of their client, and the NSW Government.

The Deputy President considered the Member’s decision on limb one, (the categories ‘discipline’ and ‘the provision of employee benefits’), to be a factual determination, whereas the employer’s submissions on this related to the reasonableness of their actions, rather than why those actions were discipline.

The Deputy President found the Member did not make a factual and or legal error in deciding that the preliminary action taken (in respect of vaccination status) was not ‘discipline’. The Deputy President found that the employer had not satisfied the high bar for disturbing the factual findings, and made the following comments:

At [173] “The [employer’s] own description of the initiating incident as an “innocuous inquiry” does not lend itself to a characterisation of the event as a step in the process of disciplinary action or the provision of an employment benefit”; and

At [176]: “In the light of the limited submissions from the [employer] as to why the actions could be so categorised, her reasoning was sufficient. It is not a matter for the Member to make or establish the [employer’s] case for it“.

Limb 1: The provision of employee benefits

The threat to the worker’s employment, which would result in the worker having no income, cannot itself constitute a provision of an “employment benefit”. The Deputy President found that this concept denotes additional entitlement beyond the simple reward for the work done, such as the employer’s discretion to allow employees to work from home, or the provision of Government Job Keeper payments.

Limb 2 – Whole/Predominate Cause

It was open to the Member to take into account that there was no medical evidence supporting that the injury was caused by actions taken with respect to discipline or the provision of employee benefits.

The Deputy President found it was open to the Member to make those observations about the evidence, and it was appropriate for her to consider whether there was medical evidence to support whether the factors found were causative.[3]

The Member’s findings that the cause of the injury was multifactorial was not inconsistent with her conclusion that the employer’s actions or proposed actions were a significant causal factor to the injury. The “multifactorial” matters the Member considered causative were all matters from the employer’s actions, so it is difficult to identify any inconsistency in the Member’s conclusions.

Limb 3- Reasonableness

The employer argued that the Member had misapplied the test in her observation that the employer’s actions were unreasonable and unfair to the worker. The employer indicated this to be a “stretch of the facts”, which demonstrated a lack in reasoning.

As the employer did not satisfy limbs 1 and 2, the Deputy President did not determine the appeal ground on limb 3/reasonableness.

Implications

The pandemic added to the challenges of running a business, with employers often having to make their decisions based on the information and resources available to them at the time. The increase in psychological claims has also added further time and costs’ pressures.

Section 11A provides a potential defence in the right circumstances. As the justification/reasonableness for an employer’s actions is often the foundation to the defence, it can become its immediate focus.

It is important to take a step back to examine if the facts and circumstances support that the actions were disciplinary in nature or involved employee benefits. In this regard, the case law illustrates that:

1. An “employee benefit” is some form of additional entitlement beyond the simple reward for the work done.
2. The approach to ‘discipline’ is not so broad that it characterises preliminary ‘innocuous’ or general discussions as a step in an overall disciplinary process. Submissions addressing why the actions were disciplinary, with clear evidence, is needed.

[1]SIRA Psychological Workers Compensation data 2017-18 to 2022-23; SafeWork NSW’s Psychological Health and Safety Strategy 2024–2026, page 7.

[2]Rock Logistics Pty Ltd v Chelin [2024] NSWPICPD 39.

[3]Hamad v Q Catering Limited [2017] NSWWCCPD.